WEDNESDAY OCTOBER 26: GDP growth forecast at 2.6 percent: IMF projects 13.9 percent Consumer Price Inflation

ISLAMABAD: The International Monetary Fund (IMF) has projected a 13.9 percent consumer price inflation in 2011 for Pakistan while the real GDP growth rate has been forecast at 2.6 percent, which is 1.2 percent less than projected for 2012. According to IMF report titled 'Regional Economic Outlook, Middle East and Asia, October 11', Pakistan's GDP growth rate is projected 2.6 percent for 2011-4.5 percent less than that of Afghanistan.
In 2012, Pakistan's growth has been projected at 3.8 percent-3.4 percent less than Afghanistan. Current Account Balance of Pakistan in 2011 is projected at 0.2 percent of GDP and at -1.7 percent of GDP in 2012, while for Afghanistan it is forecast at -0.8.percent of GDP in 2011 and -4.4 percent in the year 2012. General Government Fiscal Balance of Pakistan in percentage of GDP is projected to be -6.5 percent in 2011 and -5.3 percent in 2012.
The report says that the economic risks for several Middle East, North Africa, Afghanistan and Pakistan (MENAP) oil importers have increased as the uncertainties inherent in political transition persist and social unrest continues. Economic activity is weak in Pakistan as a result of the devastating floods and recent urban riots. Unemployment has increased with the economic slowdown, especially in Egypt and Jordan, and may increase further. Average real GDP growth among MENAP oil importers is projected to drop below 2 percent in 2011, down from 4 1/3 percent achieved in 2010.
The report says that political and economic transformations in several of the region's oil importing countries are advancing slowly and are expected to extend well into 2012. Moreover, global activity and confidence have weakened, adding to a marked increase in economic uncertainty in the region. Average real GDP growth for MENAP oil importers is projected to drop from the 4? percent achieved in 2010 to below 2 percent in 2011. The recovery in 2012 is expected to be weaker than previously anticipated, with growth projected at just over 3 percent.
Fiscal deficits of the oil importing countries are expected to widen by about 11/2 percent of GDP in 2011-12, as authorities have maintained a countercyclical fiscal stance. Universal subsidies and transfers, which provide only limited benefits to the poor, have increased sharply as governments' attempt to cushion the impact of the downturn and high commodity prices. In 2011-12, oil importers' financing needs are estimated to reach about $50 billion a year, and in many countries, excessive government financing from domestic banks is squeezing the availability of private-sector credit.
According to the report, the World Bank's report, titled 'Doing Business' (DB), and the World Economic Forum's report titled 'Global Competitiveness Indicator' (GCI), rank Pakistan near the bottom, which means that the country is being considered as having one of the most difficult business environments. Business environment reforms would also need to address one of the MENAP region's main challenges like how to create employment opportunities for its large youth population. The challenges, the report says, are more acute in Egypt, Libya, Mauritius, Pakistan and Syria.